[dezabilityParticipant@dezabilityJoin Date: 2014Post Count: 16]

September 19, 2014 - 9:48 am

Hi thecrest.

The agent I bought it from do not do rental management any more.

Yesterday I rang two other agents, (one of them didn’t even pick up the phone!) and the other took my details down….time will tell.

The next major town is around 6 hours drive. (major city)

[dezabilityParticipant@dezabilityJoin Date: 2014Post Count: 16]

September 17, 2014 - 10:50 am

Thanks for the ideas Benny. I have checked sites like sqmresearch and abs.gov.au and the numbers aren’t bad at all. Vacancy rate is 1.8% and generally lowers down to around 1.4% around December on average for the last 3 years. The properties around it are very sound and next door is at least a million dollar property. I am getting it valued as we speak so that should provide a better insight.

hanoixua, I have thought about managing it myself but with all the horror stories I’m reluctant to give it more thought. Now that I’m put in this position, it might just have to be an option. Any tips or advice?

Kinetic, that sounds plausible and I get the feeling it is about this – the fact that it’s ‘more trouble than it’s worth’. The funny thing is, when I look at this agent’s property for rent listings, they are FAR WORSE than my property, with significantly lower rents. My property surely would not attract this type of clientele.

The town is of moderate socioeconomic status – rent is on a good number considering where it is comparable to big cities. A new shopping centre was opened no less than 6 months ago nearby and the country ‘stigma’ of derelict culture is not present in this area at all. It just doesn’t make sense!

I am considering contacting the second agent to give me some brutal feedback. Whether or not he will take my calls or respond to my emails is a different matter.

• This reply was modified 10 years ago by  dezability.

[dezabilityParticipant@dezabilityJoin Date: 2014Post Count: 16]

February 6, 2014 - 8:39 am

Hi Mick,

I've got the exact same living scenario and finances as you (self employed, part time working wife, dependants and 220k mortgage with little savings)

Depending on what you want to buy, I suggest seeing a broker as they will break down what you can afford and see which lenders would bite.

I'm currently going through an application for a rural property investment and even though I had to jump some major hoops, 2 lenders didn't see a problem, just needed to provide more details and projections. 

Hope that helps

[dezabilityParticipant@dezabilityJoin Date: 2014Post Count: 16]

January 31, 2014 - 6:19 am

Hi Dark Knight

I'm just about to find out! Going through that process now, but so far looking good, few lenders knocked it back straight away, but CBA my current lender just needed further docs and info (self employed) and also ANZ are ok with it.

I'm considered 'high risk' since being self employed under 2 years on a minimal income but lenders are still willing to service provided I supply required docs.

BH is now a Category 3 so things aren't as bleak as some make it out to be!

[dezabilityParticipant@dezabilityJoin Date: 2014Post Count: 16]

January 31, 2014 - 4:35 am

Just digging this thread back up from the 2013 grave.

I've recently put a deposit down on a property in BH, and it looks very promising. Going from my numbers, it ticks all the boxes and I should be somewhere in the 20%+ yield once all is said and done (after reno and capital costs). I'm a first time investor so a place like this fits the bill for finance and low-risk outlay.

I went there last week by train and coach from Sydney (take the plane if you can), it is one unique experience – and if you are unsure, do the same thing and actually go there for a few days. I hired a car and went all over the place, checked out 20+ properties and spoke to many people. All my doubts and perceptions flew out the window.

The town is not dwindling by any means, has all the major eateries, retailers and mining is still going strong. Great national parks and tourism is building. There is a new Coles development underway just near the existing Centro shopping centre so plenty of jobs on offer.

I also know of at least 3 investors who do very well in BH, each having at least 3-4 properties with low vacancy rate and laughing all the way to the bank with high yield positive cashflow.

For those who say stay away and scaremonger, there's a difference with actually doing due-dillidence and research compared to going from opinion and numbers in the media.

[dezabilityParticipant@dezabilityJoin Date: 2014Post Count: 16]

January 23, 2014 - 2:05 am

The Dark Knight wrote:

1) Yep thats right. You can try for a 5% depoist at cooling off just so you can have more money in your account

2) I would personally call them and than send an email to confirm your offer, I find its easier to haggle over the phone. Make sure you mention negative aspects about the property before you put the offer in. Good luck

You can ask for subject to finance if you think it will sell soon

Ok thanks!

oh, so if I gave only 5% after cooling off, wouldn't that incur LMI? Or have I got that wrong and that's only on settlement (20/80) ?

[dezabilityParticipant@dezabilityJoin Date: 2014Post Count: 16]

January 15, 2014 - 8:54 pm

I see, this is very helpful. I looked at pricing online for laminate tops and it does seem a lot cheaper and easier to install.

Would love to hear more about renovations to AVOID

[dezabilityParticipant@dezabilityJoin Date: 2014Post Count: 16]

January 15, 2014 - 2:26 am

Great tips guys

What about benchtops? Ceasarstone bench as opposed to laminate?

I'm thinking ceasarstone (purchased wholesale) because it will last a lot longer and will not be damaged by heat, knife slicing or peeling.

[dezabilityParticipant@dezabilityJoin Date: 2014Post Count: 16]

January 14, 2014 - 9:30 am

Wow, thanks for all the great help guys, this forum is amazing

Jamie M wrote:

dezability wrote:

Now what I don't understand is (and it only occured to me just now), how come we are going through a lender when we have usable equity to borrow against in our PPOR? Isn't it just a case of going up to our current bank and getting them to write a cheque type thing?

Hi and welcome aboard

There's a couple of ways to do this.

Most bankers and a lot of brokers will simply cross collaterise your home with your investment. They do this by taking your home and using it as security for your investment property. This isn't ideal – it gives the bank too much control of your assets. It's great from the banks perspective but not yours.

The best approach is to avoid cross collaterisation and avoid using your home as security for your investment.

To do this, you'll need to have three loans set up. The first is your current home loan, the second is an equity release against your home (which covers the deposit/costs on your IP) and the third is the investment loan.

So for illustrative purposes, let's assume you're buying a $100k IP. The loans would be set up something like this:

PPOR

Loan 1: Your current home loan

Loan 2: $25k equity release to cover a 20% deposit and costs (such as stamp duty, etc) on your $100k IP

IP

Loan 3: $80k loan to cover the remaining 80% balance of your IP (this can be with the same or another lender)

Now this is just a general structure – and may need some tweaking depending on your circumstances and longer term goals.

Hope that helps.

Cheers

Jamie

Bingo! This is actually the solution that my broker suggested and after studying the numbers, I am beginning to understand how this all works

Few questions,

1) Going from your example of Loan 2 equity release, will this interest rate be set at my Loan 1 rate? and would I be able to have flexibility on paying interest only for example?

2) And for Loan 3, could I negotiate the lender to match my current PPOR home loan rate?

3) I'm assuming costs will be tax deductible on Loan 3, what about Loan 2?

Sorry for all the questions, it's funny how they all pop up only when you leave the broker's office

TheFinanceShop wrote:

Have you previously paid LMI against your current loan? 

Also how are you calculating equity?

No, we coughed up the 20% on our current loan to avoid LMI.

We calculated by taking the RP Data valuation and minused the debt we owe on the loan.

My broker gave me the option of having a full valuation done this week to get a better figure – I'm leaning towards this as it will reveal the true equity figure?? (There is about a 50-80K difference with that figure and what the market around us is selling for!!)